Moshe Hogeg, Israeli entrepreneur extraordinaire and football club owner, has received a blow in court - a liquidator has been assigned to one of his companies, Invest.com.
The presiding judge said that this is a direct result of the company not showing up to represent itself in a recent hearing.
Unpacking a complicated case
Hogeg is, amongst other things, the managing partner/chairman of Singulariteam, a Cyprus-based venture capital fund that focuses on financial technology. In 2014, the fund paid $5 million to set up Invest.com (otherwise known as IDC), a portfolio management website, with the intention of entering the foreign Exchange market. The site was launched in 2016 after raising $20 million in funding. Hogeg was (until very recently) the controlling shareholder and the sole director of IDC Israel.
Last week, Hogeg filed a suit against an Israeli binary options outfit called Anyoption. Anyoption is based in Cyprus and was created in 2009. The suit relates to a deal between Anyoption and Invest.com.
Acquisition
Invest.com acquired Anyoption in June 2017, because the latter could no longer legally operate in Israel. It had at the time around three million customers. The deal stated that Anyoption shareholders would receive a $3.5 million cash payment, 35 percent of the shares of the new joint company, and $1 million worth of STX tokens (more on that later). In return, Invest.com was to receive access to Anyoption's customer list and access to the South Africa market. It was also understood by Invest.com at the time that Anyoption had $7 million available capital.
However, the deal went sour. On the 14th of November, Hogeg sued seven Anyoption shareholders in a Cyprus court, claiming "fraud, breach of an agreement, and threats." The suit claims that Anyoption misrepresented its financial situation to Invest.com before the merger - it actually had debts that "substantially exceed all of the capital that the company may have had."
The very next day, the same Anyoption shareholders sued back, but in an Israeli court. They claim that Invest.com was managed deceitfully and that Hogeg was using company money - amounting to tens of millions of dollars - for his own needs. They asked for Hogeg's assets to be frozen, and for Invest.com to be liquidated.
The claims
One of the Anyoption shareholders' complaints concerns Stox, a Blockchain company set up by Invest.com in July 2017.
Stox raised $34 million in its initial coin offering, which was promoted by Floyd Mayweather no less. Allegedly, it was to give 25 percent of its shares to Invest.com (and thus vicariously to Anyoption) under the terms of a deal that pre-dated the Invest.com/Anyoptoin merger. Instead, Hogeg allegedly stole Invest.com's share of these proceeds. Specifically, he purchased Invest.com's share in Stox for himself, for $3 million, via a fraudulent agreement, and did not share this with the company. Nor did he share the 25% of unsold STX tokens to which Invest.com was allegedly entitled.
The Anyoption team claim two grounds for liquidating Invest.com - that it is unable to pay its obligations, and for reasons of justice. The company is insolvent, according to the petitioners, because Hogeg emptied it of money himself. They also claim that Hogeg himself confirmed to them that Invest.com is not profitable, and needs external money to pay its employees.
Hogeg responded: "This petition for liquidation of a Cypriot company in Israel was designed solely for the purpose of exploiting the courts in Israel, which are not the appropriate forum for liquidating a Cypriot company... It is no accident that the petition for liquidation of the Cypriot company in Israel was filed the day after the lawsuit was filed by Singulariteam in Cyprus, and it is no accident that they resorted to the Israeli media," according to Globes.
Results so far
On the 20th of November, Judge Hagai Brenner of Tel Aviv District Court denied a request made by Anyoption that Hogeg's assets be temporarily frozen. The request was filed because Hogeg allegedly purchased a very expensive property the day after Anyoption began suing him. The request was denied because the case relates to a company, not the controlling shareholder.
On the 23rd of November, Brenner initiated liquidation proceedings against Invest.com, following Hogeg's failure to attend a relevant court hearing. His decision was delivered in a 19-page ruling that was careful not to imply a decision either way but said that Hogeg's silence speaks volumes. Liquidation was initiated to prevent "damage to creditors" and allay fear over assets.
Interesting things
Now, there are a few interesting factors in this case.
First, on the 15th of November, that is, the day after filing the suit, Hogeg resigned as director of Invest.com. According to Calcalist, the reason given was the refusal of the Anyoption shareholders to accept the shares that they were owed.
Second, Invest.com claims that the merger deal specifically stipulated that any dispute between the two parties could only be resolved in Cyprus. As mentioned earlier, Hogeg claims that the only reason that the plaintiffs are pursuing this matter in Israel is to bring publicity to the matter "for the purpose of exerting pressure and attempting to extort the shareholders in IDC and Hogeg to abandon their claims against the petitioners...as part of an attempt to extract more money from them."
Third, according to Calcalist, one of the Anyoption shareholders is a former income tax commissioner, and two others are convicted fraudsters.
Fourth, Stox recently denied rumours of its own insolvency, among which were accusations that Hogeg had dumped (sold) his STX tokens as soon as he received them back in 2017. Stox said that these were "private transactions...not related to [Hogeg's] involvement in the company at all and were concluded independently."
